Is my Employee Referral Program working?

Is my Employee Referral Program working?

Tawfiq Abu-Khajil
July 11, 2024
2 min read
What is an employee referral program?
A strategy where you encourage your employees to refer people they know for job openings at your company. If their referral gets hired, the employee usually gets a reward. It's a way to tap into your employees' networks to find potential new hires, making recruiting easier & often more effective.

Employee referral programs have proven to be an effective way to tap into your existing workforce's networks and find potential top talent. However, to ensure that your employee referral program is indeed working, you must assess it from various angles. In this article, we will break down four key aspects to help you determine the effectiveness of your program.

Are my employees engaging with it? 

The first sign that your employee referral program is functioning effectively is employee engagement. To gauge this, measure the number of referrals you receive. A healthy program should see a steady stream of employee-generated referrals with at-least 35% of your applications come in from referrals. If this number is consistently lower or declining, it may indicate a lack of awareness, enthusiasm, or incentives.

To encourage more engagement, consider promoting the program internally through various communication channels, such as company-wide emails, text, posters, and team meetings. Additionally, offering enticing rewards or recognition for successful referrals can boost participation. Here’s 4 Strategies to keep your Employee Referral Program active.

Are referrals leading to hires?

A high number of referrals is promising, but it's equally important to evaluate whether these referrals are leading to actual hires. Monitor the number of referrals who successfully make it through the hiring process and join your organization. A successful employee referral program should contribute significantly to your overall hiring efforts. Typically a healthy recruiting organization has employee referrals account for 25 - 40% of their annual hires.

If your referral rate is low, it may suggest that the program needs refinement. Review your referral criteria and the quality of job postings to ensure they align with your company's needs. Encourage your TA team to expedite the hiring process for referrals to maintain their interest and enthusiasm.

Are my referred hires staying?

Hiring referrals is one thing; retaining them is another. To determine if your employee referral program is truly effective, assess the retention rate of employees hired through referrals On average, referred hires have a retention rate of 46%, compared to a 33% retention rate for workers found through an online job posting website. In fact, referred hires stay 70% longer than other employees.

If these hires are leaving the company at the same rate or faster than your non-referred hires, it could indicate a mismatch between the referred candidates and your organization's culture or expectations. To address this issue, consider refining your selection criteria for referrals and providing clear expectations during the hiring process. Additionally, offer mentorship or onboarding programs to help new employees acclimate to the company culture and reduce turnover.

Are my Employees re-engaging with the program? 

A successful employee referral program should inspire continued participation from your workforce. Measure how often employees refer candidates over time. If you notice that employees are referring candidates repeatedly, it suggests that they find value in the program and are motivated to participate.

To keep employees engaged, periodically refresh the program with new incentives, recognition, or referral challenges. Additionally, gather feedback from employees on their experiences and incorporate their suggestions for improvement.

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